Fears That Tort Reform Could Stalemate Terrorism Insurance Bill

The House bill, H.R. 3210, calls for significant limitations on tort liability regarding lawsuits filed against American businesses.

These include a prohibition on punitive damages and a cap on fees paid to plaintiffs attorneys.

By contrast, the Senate bill, S. 2600, calls only for procedural reforms. Specifically, under S. 2600, all tort lawsuits arising out of a terrorist attack would be consolidated into a single action adjudicated before a federal court.

Industry lobbyists say this procedural reform, by mandating federal court jurisdiction, would solve the overwhelming majority of problems with tort lawsuits. It would, they say, prevent lawsuits from being brought in states like Mississippi that have a reputation for awarding high punitive damages.

Nonetheless, lobbyists say, some Republicans may insist on a specific limitation on punitive damage awards, which could create an impasse with Democrats.

Another issue is group life insurance. Some group life insurers are seeking to have group life included in the legislation as a coverage qualifying for federal assistance.

Lobbyists say this is causing problems among some Senate staffers, who have accused the industry of “piling on,” that is, trying to expand a bill that should be as narrow as possible.

One lobbyist says it is unclear whether the effort to include group life would help the cause, by bringing in another big constituency to support it, or hurt it, by creating the impression that the industry wants too much.

“I can argue it both ways,” he says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 23, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.